After our lunch, Bank of America Corporation, which of course everyone knows is a bank that has $3.4 trillion in assets, a market cap of over $345 billion. On top of that, they have over 3,600 branches throughout the country. With us is Co-President Dean Athanasia, and we're really quite pleased to have him. As you know, Bank of America has created these two Co-Presidents, and Dean is one who overlooks the consumer wealth management, global banking, global markets. They serve 69 million customers. It's truly one of our nationwide banks in the United States. Dean, thank you so much for joining us.
Sure. It's great being here. Thank you.
Maybe speaking of the new role, maybe you could talk to us about you and Jim DeMare, who is the other Co-President, of course, about the new responsibilities and the growth that you're looking to drive through the line of businesses at Bank of America. Where do you see, like, the biggest opportunities?
Yeah. Let me come back to that last one. Just to give you a little bit of an overview, Jim and I oversee the eight lines of business at Bank of America now. We work with them, and you saw them all on Investor Day. It's an impressive array of leaders up there. We work with them on their strategies, executing, hitting their metrics, finding the business opportunities in and around the businesses, having them work together.
Practically speaking, you mentioned Jim. I really, you know, I still keep an eye on all the regional businesses I used to have, and although so really focused on those. Jim's gonna do the same on the global market side. Where we spend the most time together, and I think are some of the opportunities I'll come back to would be, you know, on our wealth continuum, looking at all the assets we have in that we think we have. You know, we have a $5.5 trillion wealth business embedded within Bank of America, looking at all the opportunities there.
Same thing, second biggest area we focus on together is our business continuum, so anything from small business bank, commercial bank, global corporate bank, all those assets, they all work together, technology and operations. We make sure they effectively work smoothly together, and we capture all the business on all our corporate, our 46,000 business clients in and around everything they do.
The last one is, which Jim calls the Venn diagram, a little bit of the intersection of Investment Banking, Global Markets, and a high net worth business on the wealth management side. Finding those are all sort of the same clients. They share products. There's a wealth of opportunity in that little intersection as well.
We're looking at everything from high-level strategy, bringing in more clients, you know, looking at deploying capital in the right areas, technology in the right areas, making sure the investments we get the return on them throughout the business. Coming back to the biggest opportunities, if I look at the way we do investor presentations every quarter, I'd break it down into consumer, right?
Continuing to lead on the deposit end, using all of our assets, digital or physical stores, having them work together, continue to drive deposits and growth. Credit card is another biggest opportunity, and we'll talk a little bit about that, but expecting to get more growth out of that and ramp it up to a 5% growth rate, over the medium term. We're working. We know we have to do better there, and we've got some focus on that. On the wealth management side, we've got, you know, on the Merrill Lynch Private Bank side, we've got over 2 million clients in that business.
We have line of sight of another eight or nine clients that are embedded within Bank of America that we need to continue to build up and bring in all their investment assets. That would be another big opportunity. On the corporate side, I mentioned, and again, we hit this on Investor Day. Our international platform, investing in it, growing in it.
That's our global markets business, our Global Corporate Investment Bank. Our payments business, we expect in the medium term, another $4 billion of revenue out of that group. We're keenly focused on that. Helping all the businesses grow, achieve, work together, and hit all of our performance metrics we've laid out on the table.
If I heard you correctly, on the Bank of America side, you've got in the consumer, potentially a pool of 8 million-9 million customers that could then be brought in to the wealth management?
Yeah, greater than $1 million in investable assets out there, and they haven't brought over all their full service opportunities. We have a line of sight on all those clients, and we're gonna use that to help wealth management grow and a better connection between the two businesses. Yeah.
Got it. Very good. Obviously, one of the strengths that you have, and you've mentioned it about your consumer franchise, what are you seeing from the internal data on consumer activity today? Are there any shifts in behaviors-
Yeah.
...going on right now in the consumer side of the house?
We've invested a lot in all of our analytics, but we have, you know, close to 70 million consumers on the consumer side, including stretching across wealth management. They push about $4.5 trillion through the economy, so there's a lot of activity that we track and keep tabs on almost daily. On the business side, you didn't mention that, the 46,000 business clients, you know, they're generating payments of $450 trillion on that side as well.
There's all this activity we look at every day to see what's happening. On the consumer clients, they're still spending at a 5% year-over-year rate. It's about equivalent to last year. If I just broke it down to debit and credit, about 5%-6%, which is just a little bit higher, and you're seeing more spend on entertainment and travel than you did last year. Just a tick up. You do see evidence of a K-shaped economy.
I know that's, you know, prevailing out there in sort of the discussion. Wages are growing faster and spend is higher on the upper end than it is on the lower end. The good thing about that is the credit quality. There's a little bit of a growing gap there, but the credit quality is not growing. There's still clients on the lower end. They're still in good shape. The lower FICO and the upper FICOs, that credit quality is not widening.
They're still in great shape. They still have a lot of deposits. They have, you know, greater than 13% deposits, more than they had in pre-COVID. They are still in good shape, still spending. As far as we can see, the asset quality is still good. On the corporate side, yeah, we can. You know, we're getting good activity from our corporate clients led by our commercial bank clients. Good lending coming out of the gate here and strong growth on that end as well.
Yep. It might be a little too early, but you mentioned the K-shaped recovery.
Yeah.
Have your folks on the front line seen any evidence that with these tax refunds that are supposed to be greater this year than last year, has that shown up yet in spending or deposits or is it too early?
Yeah. It's too early to tell. Usually, we do the analysis post. You know, we'll see inflows now, and we expect outflows coming all the way through April up to the 15th, so it. As of right now, it's on track with what we expected, so there's no surprises there, no differences there, and you'll see that in our deposit numbers.
Got it. Okay.
Yeah.
Obviously, you held an Investor Day in early November in Boston, and one of the themes was delivering one company-
Yeah
...to your customers. Can you talk about the advantages you have with the integrated platform that will enable you to do this? How is a competitive differentiator in your local markets that you have this, and what are some of the other differentiators that Bo f A brings to the table?
Wow. I'll break my whole presentation down to a 60-second answer here. If I look at on Investor Day, if you didn't go, we compete at a very local level in the United States. I'm gonna leave out international for a second. Early on, we targeted 100 top markets in the country. We wanted all of our businesses to be in those markets. We wanted them all working together because we know we're competing against an array of banks. We selected or elected a leader, a senior leader from one of the businesses to be the market president, if you will, and they marshal all the resources.
The resources in that market are dependent on the clients that are there, business clients, consumer clients, two-legged clients, and then our desire to drive market share in each and every one of those markets. The market president's job is to make sure that each and every line of business is taking clients and growing their client share and being number one, striving to be number one in that market, and we measure it, also working with each other, sharing clients, referring clients to help each other grow. That's where we always come up with the number of 10 million referrals that I referenced back in Investor Day, done every year.
Somebody like Wendy Stewart, she gets on stage in Global Commercial Banking, and she can declare that, "You know, I'm gonna get 30% of my clients from wealth management," 30% of her new clients. What she's saying is, "Look, I've got a great partnership with wealth management. I'm gonna rely on them. They're gonna help me grow. In fact, in my financial plan, I have that level of growth in my plan." It's a great cultural thing. People love to come in and work, and they know they're gonna work in a team environment.
I think that in itself is a competitive advantage because in a market, yeah, we compete against the national banks. We compete against very strong regional banks and very strong local banks, and you need that local level of leadership on top of everything else we do. We have to be good in decision-making. Over the top, I mean, I think we have strengths in a lot of different platforms. I mean, technology and scale, first and foremost.
We spend $13 billion a year on technology, $4 billion on new initiatives, and that's growing over $4 billion. We've been able to build great platforms. Our mobile banking integrated banking and investment platforms. We've got over 1 billion logins every month, and we've got all sorts of transactions going through that. We advertise our businesses. We make sure it attracts clients to make sure they stay in longer and do business. You know, something like Erica we added on.
It's done over 3 billion transactions since the day we rolled it out. Same thing on the corporate side. It's anchored by CashPro, right? 35,000 of our business clients are using CashPro. They're making those $450 trillion in payments, over 9 billion transactions going through that. Those are incredible, you know, just scale things that we have advantages over everyone else.
The last two is our wealth management platform, the combination of Merrill Edge, Merrill Lynch, our private bank, workplace benefits, all those platforms working together extremely hard to beat in terms of the level of investment somebody would need to replicate that. Then last, I'd say our international platform. We've invested heavily in that, and that includes, you know, a global payments business. We operate in 45 countries and jurisdictions, over 140 currencies. We have all the platforms, products, and services to take all of our clients internationally around the world, which is a huge competitive advantage.
Speaking of the wealth management.
That was okay, right?
Yeah.
In that short period of time, but that was one of those down my presentations. Yeah.
In the wealth management area.
Yeah
Targeted acceleration in the net new asset growth of about 4%-5% over the medium term has really brought it to investors' attention. Can you walk us a little deeper through the key drivers to reach that goal, including the integration that you just mentioned-
Yeah
...the different areas? Also highlight this Workplace Benefits. I'm not so certain most people know all of that.
Yeah, we have it. Yeah. It's a great secret, and we're about to go in a big way with that. You know, overall, just remember, we're wealth management at Bank, w e have just under $5.5 trillion in assets, so it's a big entity, right? We have a lot of different pieces. One of the ways, and I love them putting a stake in the ground on 4%-5% net new asset growth. That's our medium-term target, so we're getting after it. We've the reason we have confidence in doing that, we have the building blocks in place or being put in place to get there. First step is you know, accelerated client acquisition and retention. We've got 15,000 financial advisors.
We backed them up with 1,000 product specialists. We are creating capacity and allowing them to be more productive, reach more clients by leveraging AI, and we'll talk about that a little bit later. Getting and retaining those individuals at a higher rate given the platform we have and everything we offer, that would be one. More aggressive recruiting to bring people on our platform who fit in our model and want to work in that team-based environment.
We have no problem recruiting, so we'll continue to do so. We're ramping up the development of our own advisors. Remember, we've got this great base of consumer financial service advisors, and they will move up. They'll do well in the consumer area in Merrill Edge, and they'll sort of move up through the continuum, and be great, private bankers and full-service financial advisors over time. That part, acquiring clients. The other one is a little bit what I talked about, again, in terms of building blocks, more and more referrals from the franchise.
Small business banking, Global Commercial Banking, global, our Investment Bank, our Global Markets group, all those groups bringing clients to wealth management, but doing it at an increasingly greater rate. This year we have a target. Next year we have a higher target, and the year after that we have an even higher target. They'll be bringing more referrals in, and that'll help grow the base.
That's sort of new clients, and then deepening with clients, I think two things. One, I think we said 64% of our investment clients use banking products and services from us. That's good, but not good enough. We've got some room to go there, not just credit card or deposits or things like that, but custom credit, trust, estate planning, all those things that help grow assets and make them more sticky in the company. Last, growing our alternative investment platform.
We're putting new products, new services, widening the array of offerings we have for our high net worth and family office clients. It's got over $100 billion of assets on that, and we see substantial growth there as well. I'll take the last one. Just explain it. Workplace Benefits embedded within Merrill Lynch is an organization that has $600 billion in assets. They do 401(k) plans. They do equity plans. They do HSAs. We offer it to our corporate clients.
Great. We have a lot of corporate clients. We've got 24,000 corporate clients using Workplace Benefits. And so, you know, we have 46,000 corporate clients in the bank, so we have plenty of room to grow. As we add new clients on, we're able to capture those assets on the platform. That helps grow our platform. It also happens when those employees separate from the company. We have a first access into them. We probably have some of their external assets already, and then we go in building over there. It's another way to acquire clients that not a lot of people have. Huge benefit for us.
Oh, absolutely.
Yeah.
It's one way of getting access to these people. You're on the front line.
You're on the front line. You're ready. You're the first call. They know you. They know.
Yeah.
What you have to offer. You're the first step into it.
Yeah, absolutely. Can we shift a bit to the credit card? You touched on it.
Yeah.
A moment ago. In Investor Day, you guys highlighted some plans to improve the growth there. Can you talk more specifically on just how are you going to drive that growth and where is it? How far underway are you with that?
Yeah. Well, you know, since I had that a long time ago, my credit card has always been a great relationship product for us. You know, we've got 71% penetration of our credit-eligible clients at Bank of America for our core cards, which is they've done a phenomenal job there. It's a great job. We could go deeper than that. There's room to grow there. But when I say credit quality, our book FICO is 780+. It is a high-quality book. You know, if we have anything in 660, probably 10%-12%, that's probably about half or a third as much as other competitors and other peers. It's a very high-quality book, and we've stuck to that, and we will stick to that.
There are things that we can do to continue the growth, though. Doing more, and I'll name a few. Doing more with our co-brand partners. Alaska Air is one of our good. Just as an example, we just launched the Atmos card with them in August, and that's got great growth across and great deepening, and people will grow assets with it. That's a big one for us and others like it. We're doing more. We changed our whole rewards program.
We just relaunched it, and it captures a wider array of our core operating account clients. You know, it's partnered with credit cards, so you get more benefits if you do both of those products with us, and we open the door. That will help, you know, both grow new clients, attract new clients, but deepen and grow those assets with clients at a faster rate. We've got new marketing programs. I don't know if you guys know we're the sponsor of the Masters, FIFA, and other sporting events, so we're leveraging every dollar we're spending there.
We're doing a FIFA credit card and so that's a you know that's been a big home run as well. We've upgraded a platform on the digital side, removed some friction. You know, we can acquire and onboard clients faster. We've changed the payment mechanisms to make it easier for clients to do more things with their credit card, which promotes deepening overall. That we've got our investment last year and investment this year in our digital platform.
Last, the platform itself. We've upgraded all. We're in the process of upgrading all the cards, enhancing them. We're adding new products. We're using AI and other analytics to do better, and go deeper on underwriting and processing and things like that, just to speed up things for our clients and help us make the right decisions. If Holly talks about it, she's hitting on Holly O'Neill, who runs that, is hitting on all those different elements. Each one of them is the building blocks, and we're tracking it all the way through, and we feel pretty confident we're going to get there.
Got it. Now, did I talk to you or Lee on the World Cup tickets the other day?
Well, since Lee is hoarding them, he's got, you know, he stuffed them in his pockets. You could probably shake him up a bit.
That's good. First quarter, 2026 performance.
Yeah.
Any updates on net interest income, loan growth? Then also any updates in the capital markets or Investment Banking that you'd like to share with us?
Yeah, you can. There's a lot there, so you can hit me. First quarter, NII up at least 7% year-over-year.
Year-over-year.
Yep.
Yep.
Yep, at least 7% year-over-year. Things are going pretty good there. We feel good about that. Deposits in the low single digits. Things are going as planned, as I said there. You know, consumers going through the usual tax inflows and outflows from corporate. You're seeing just the normal seasonality and outflows for dividend bonus payments and everything else that happens in the first quarter. We expect deposits to grow after we go through these periods in line with what we're talking about.
Wealth management, you know, fees are up double digits, so that's good for the first quarter, and that continues to go. There will be some volatility, but again, that goes. When I get to lending, it's actually come out of the gate pretty strong, led by our commercial bank, and I would expect in line or above the H8 data. They're doing a great job, and we see good activity in our corporate clients. Capital markets is a little bit different. You're gonna see probably a lot of volatility that's gonna happen in the last two weeks here. Let me just couch it by saying, let me just focus on where we are today, if that's okay.
Yes.
Investment Banking, we would see as we stand today, as compared to last year at this exact time, up, you know, 10%, double digits right there. I think, on Global Markets, it's up, low double digits as well. Really good activity. We've got whatever it is, 15, 16 more days left of trading, you know, we'll see where the results go. A lot of activity. I think Jim would get mad at me if I didn't say he's pretty confident he's gonna hit his 16th consecutive quarter of year-over-year growth in capital markets, so in global markets. They're doing a great job, and he's continuing to drive it.
That's great. We've always heard that volatility really helps the markets businesses.
Yep. Yep.
Clearly you're seeing that. One of the areas that everybody focuses in on Bank of America is expenses and operating leverage.
Yeah.
You provided at Investor Day some operating leverage targets for the medium term. For this year, it's at the low end of the range, is what you talked about. What are the expense levers that you have confidence in that can, you know, get you guys to that target and the amount of operating leverage that could improve from this year's target?
Yeah. I think we gave at earnings, you know, 200 basis points. At least 200 basis points was the guidance. You know, as I said, you've got good NII growth, and that's gonna help us, and the continued deposit growth in the second half of the year is gonna help us. We've got you know the volatility you said in the capital markets area and the investment banking area and wealth management. Those are all good revenues. We'd want to see that continue. They do come with expense. Obviously, I sort of count that as good expense. On the rest of it, we have very tight expense controls. We watch where we're spending, whether it's the investment.
We're still gonna hit our operating leverage and continuing our positive streak there, but we're gonna, you know, we make sure that all the other expenses in the company and we're watching that. AI is gonna help us, not yet baked into numbers. As we roll out, we'll talk about that as we roll those things out, that might give us some leverage as well. There's a lot of things we can do. I will say on all the other expenses that are non sort of activity based, we've got tight controls on. We feel pretty good about those, and we continue to work on them and drive efficiency from them.
Got it.
Yeah.
You've obviously invested. You mentioned the tech spend that you're going to have this year. Maybe investors are focusing on the spend, the investing and the positive operating leverage-
Yeah.
...that you're gonna generate. Maybe you can walk us through how you approach the investment decisions both for tech and non-tech every year.
Yeah.
How important, you know, at the top of the house, you, Brian, Jim, on consistently delivering positive operating leverage.
Yeah, we're very focused. We can do both, right? Our model allows us to do both. You know, invest at a heavy level in the level we need to drive growth, but also get the operating leverage and efficiency. You have to remember the way we manage it, we're sort of like a, we manage a portfolio, right? We've made investments, whether it's technology, marketing, you know, other sorts of investments. Three years ago, two years ago, one year. All the results. We track every single thing we do.
We make sure we get results. We get results that increase revenue, drive productivity, reduce expenses. We're putting the new investment on top of that, right? Because there's capacity, there's a space. That way we can drive higher, we can drive and continue our positive operating leverage and make all the right investments. For technology, you mentioned, I'll hit that one. I said over $4 billion in new investments. That's.
If you really look, that's gone up as has marketing about $1.5 billion over the last 10 years. We're able to sort of add more to the pool and get great benefits out of it and feed our business so we get growth, and we also get operating leverage along the way. We like to manage. I think it's because our culture is if we're gonna invest something, let's make sure. Let's not forget about it. Let's make sure it delivers year one, year two, year three. If we get those results we want, we can actually do more and invest more and get more growth. It's kind of like a flywheel. It just keeps going.
Obviously, technology is important for the banking system. It seems like AI could be one of the industries that are real big beneficiaries is going to be banking and specifically Bank of America. On your Investor Day, you guys talked about utilizing-
Yeah.
...AI, of course, across the businesses. Can you spend a few minutes with sharing with us some of the live examples of where AI is succeeding? Also going forward, where are some of the best opportunities-
Yeah. Yeah.
...that may come from AI?
Yeah. I actually think we have a unique approach that we haven't sort of really put out there and advertised. If I may just tell you how we run it.
Yeah.
This is, we created this AI catalyst group in the company, very important to us. Since it's so important, we took our Head of Strategy, Jeff Busconi , and our Head of Technology, Hari Gopalkrishnan , and they're working together, and they run the AI catalyst group for us. We selected 18 senior business leaders to be on that catalyst. They represent all the different areas of the bank, and they work together and individually to make sure that we're driving AI into every single area.
It's such a large bank, it's a way to get it done and to share and leverage, and get every bang for every buck that we put out there. Before I get into the new ones, I mean, just point out. I like to point out maybe because, you know, it was back in the day when I was there when we started, but Erica, we rolled it out as an AI investment a long time ago. Now we're on our third generation of it, so it always advances forward. Like I said, it does 3 billion transactions. That is doing the work of 11,000 people for us today.
Wow.
I mean, if I didn't have that, I'd have to have that many more people given the amount of touches, and it will keep going. We've taken. It's a great example because we've taken that technology, and we brought it over to the corporate side. It now answers 40% of questions that our corporate clients are asking us. Takes, you know, you save even more heads.
Internally, we use it. 90% of our employees are using it for help desk, call desk, whatever they need internally. Takes out 50% of the calls we used to have, and it's going to keep going, right? We'll be on a fourth generation, fifth generation, whatever. Some of the new things coming out, you know, all of our developers, 18,000 developers using GitHub, so, you know, they're developing things faster.
Think of 20%-25% more productivity, faster, cleaner, better at getting it out there. It allows us to get out with our clients much faster on some of the things I talked about that we develop with. That's a big one for us. We use Erica again. We do Erica Assist. Erica Assist is now if you're a call center individual with a call that comes through or anywhere, it listens to the call, and it compiles all the data that that individual need to answer the client. It does it in three seconds.
There's no more hunting and pecking. All the analytics come up, all the data come up, and it gets the best available answer for the conversation with the client. I think that's huge for us. We use Salesforce Agentforce. We've rolled it out to 1,000 advisors. When I was saying make those financial advisors, help them become more productive, we've rolled that out. We've got 80,000 people on Salesforce, so we're gonna roll it out to 20,000 individuals by the end of the quarter, right?
If I was going to see you, it'd pull up all the information on you and break it down and allow me. All that prep time goes away, pre- and post-call. There's other capabilities in it, but that's just a huge time advantage, and we don't need a lot of admin sitting around creating that or the advisor to sort of spend time there. Huge productivity lift there. I'm thinking, what else do we have? We have Copilot in the company.
We've got 150,000 people on Copilot, including yours truly here, using that, doing, you know, 1.5 million queries every week. Huge productivity lift across the board for any number of things. We've got other projects looking at a better, faster, quicker underwriting and more analytics helping us to streamline processes and automate processes across multiple platforms. Information delivery is speeding that up immensely and compiling three or four different databases for, you know, better solutions.
All those things are coming. Those, you know, there's many more. There's thousands of ideas that people are circling up, but that catalyst group is responsible for driving it, getting it done fast, getting it out there, and getting in, you know, finding us more productivity. That'll help in our operating leverage and everything because we didn't, we haven't baked all that stuff in, but that's coming.
As AI has evolved, I'm assuming it's taking a bigger percentage of the 4 billion of growing-
Oh, yeah. Yeah, absolutely. Sorry. Yeah.
Yeah.
It's all there, the investments. All the investments we need.
Yeah.
Because we, you know, we sort of dedicated a fair amount to it. Yeah.
Got it. If we shift over to the regulatory side.
Yeah.
Basel III Endgame, we're thinking maybe we get some news here in the third or fourth week of March, so it's coming right up. What are your thoughts on just the regulatory environment, the outlook? Also, G-SIB is another.
Yeah.
Item for you.
Yeah. No, I think you're right. I think we'll get a proposal hopefully by the end of the month, maybe a little bit after that. I'm looking forward to, you know, hopefully we finalize the capital rule. That would be terrific. I think the regulators would agree that the banks have you know, a great level of capital to you know, to support a growing economy. I think if you look at, for us, between the net-net impact of the G-SIB and the Basel III Endgame would be to lower regulatory capital for us. That's a positive thing.
I think another thing that sort of occurred and more on the operating side is that operating procedures around materiality, particularly as it relates to MRAs. I think that was particularly important for us, for operating risk because it helps us dedicate the best people at the most critical areas and lower risk overall, you know, not only for us, but for the industry. I think that environment, waiting for the final capital rules, but that's, you know, a lot of positive direction there.
Sure. We've run out of time, but I do wanna get one last question in. Can you talk about the trade-offs between the deployment of excess capital, where you think which businesses should receive it-
Yeah
...versus share repurchases and dividend increases?
Yeah, I think when we look at we generate a significant amount of excess capital, our CET1 ratio in the fourth quarter, 11.4%, right above the minimum level of 10% and our sort of buffer there of 50 basis points. Our first inclination is to use excess capital to help our businesses grow, and that's what we always try to do.
Again, this is where when I said we look at things in a portfolio. Every business that we have and every project, all those things I mentioned within a business, you know, operate and have different characteristics to it. On our consumer side, on the lending side, you know, high return on average capital business, you know, drives results over time. You just have to watch a loss rate.
If you compared that to investing in Merrill Lynch, which we also would do, you've got also a high return on capital business, but the expense dynamics are much different, and they're less efficient as a consumer bank is. Then my friend Jimmy, Global Markets, you know, you can invest capital or you can deploy capital really quickly, get a result, get a return, but the returns are lower than those two businesses.
I think he came in around 13% for 2025. He has a medium-term target for 15%. Again, that's gonna be lower. What we have to do is make sure we are capitalizing on the opportunities in the market, finding the opportunities that are out there we can drive, but it's a balanced portfolio of where we allocate capital to get the best results and returns and growth for our shareholders.
With that, Dean, thank you so much for joining us. Please join me in a round of applause. Thank you.